Do loyalty cards actually work? Here is the research.
Not our research. Published, peer-reviewed studies of real shops, real tills and real customers, summarised in plain English, with every reference at the bottom of the page. TapReward is designed around these four findings.
A card that starts at zero is a card that gets binned.
In 2006, two researchers ran an experiment at a car wash. Half the customers got a loyalty card needing 8 stamps for a free wash. The other half got a card needing 10 stamps, with 2 already filled in. The effort required was identical. The results were not: 34% of the head-start cards were completed, against 19% of the blank ones, and they were completed faster.
Psychologists call it the endowed progress effect. A journey that has already begun feels worth finishing; a journey not yet started feels like a decision still to make.
What TapReward does with it: every new customer’s card begins with their first stamp already on it, awarded the moment they tap. Their card is never blank.
Customers speed up as the reward gets close.
A study of a real café’s stamp-card programme tracked when customers bought their coffees. The pattern was unmistakable: the closer a customer got to the free coffee, the sooner they came back, with the gap between visits shrinking by around 20% over the life of the card. Cards were finished about 16% sooner than each customer’s starting pace implied.
The finding has a name, the goal-gradient hypothesis, and it is nearly a century old. The 2006 study proved it holds at a coffee counter.
What TapReward does with it: your dashboard keeps a live list of customers who are one tap away, because a nudge at that moment lands on a customer who was already leaning towards the door.
The free coffee is a beginning, not a cost.
The obvious worry about a loyalty card is the giveaway. A two-year study of a retail rewards programme found the opposite problem: the giveaway was the profitable part. Customers who redeemed a reward spent 17.5% more per week in the four weeks that followed, and the programme lifted sales by about 6% while it ran.
Redemption is a moment of goodwill with your name on it, and it shows up at the till afterwards.
What TapReward does with it: unclaimed rewards are listed in your dashboard as exactly what they are, return visits waiting to happen, with a one-tap way to remind their owners.
Keeping a customer beats finding one. It is not close.
Research made famous by Bain and Company puts the cost of acquiring a new customer at somewhere between 5 and 25 times the cost of keeping an existing one, and found that a 5% improvement in retention lifts profits by 25% to 95%, depending on the industry.
One more finding worth knowing: loyalty programmes move the middle. A longitudinal study found the biggest change among light and moderate buyers, the occasional visitors with room to become regulars. Your best customers were coming anyway; the scheme earns its keep on everyone else.
What TapReward does with it: the dashboard is a retention tool before it is anything else. It watches who is warming up, who is slipping, and who has quietly stopped coming, while there is still time to do something about it.
What we are not claiming
These are independent studies of loyalty mechanics in general. They are not TapReward results, and no loyalty scheme can promise your shop a particular number. Results depend on your trade, your reward, your regulars and a hundred things besides. That is exactly why TapReward’s dashboard leads with your own figures: who came back, who is close, who has gone quiet, and what changed after every nudge you send. The research says the mechanics work. Your dashboard shows whether they are working for you.
References
- Nunes, J. and Drèze, X. (2006). The Endowed Progress Effect: How Artificial Advancement Increases Effort. Journal of Consumer Research, 32(4).
- Kivetz, R., Urminsky, O. and Zheng, Y. (2006). The Goal-Gradient Hypothesis Resurrected. Journal of Marketing Research, 43(1). Available from the authors at home.uchicago.edu/ourminsky.
- Taylor, G. and Neslin, S. (2005). The current and future sales impact of a retail frequency reward program. Journal of Retailing, 81(4).
- Gallo, A. (2014). The Value of Keeping the Right Customers. Harvard Business Review, citing research by Frederick Reichheld, Bain and Company. hbr.org.
- Liu, Y. (2007). The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty. Journal of Marketing, 71(4).
- Belli, A. et al. (2022). 40 years of loyalty programs: how effective are they? A meta-analysis. Journal of the Academy of Marketing Science, 50.
- Square with Restaurant Business: Scaling QSR Loyalty (squareup.com).
- World Coffee Portal (2025). Project Café UK 2025.
